23 (118) 2016
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Creating the right culture for innovation in Poland

Michael Dembinski talks to Beata Cichocka-Tylman, director at PwC Polska, who looks after innovation and R&D, including grants and incentives
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Poland’s economy is at a crossroads – it can either continue to grow by making and doing things for other countries at a lower price, or it can make the leap to becoming an economy based on innovation.

I talk to Beata Cichocka-Tylman from PwC Polska about what Poland needs to accomplish if it’s to change from being an operational economy to being a strategic one.

“The key question that faces Poland is what are the main areas of specialisation in which we’d like to develop. It’s impossible to be good in everything. There needs to be a strategic perspective for this country – and for its regions. We need to focus on those technologies in which we are the best, and where we can be effective on the international level in a three- to five-year perspective. When, for example, we look at the UK’s approach to the autonomous vehicles sector – from drones to driverless cars, we can see a whole ecosystem being created around this technology – from tax exemptions for businesses through to universities where new ideas can be developed and commercialised,” says Ms Tylman.

I ask whether there’s a danger in picking winners. Back in the 1960s, the UK’s ill-fated National Research and Development Corporation staked the country’s economic future on the hovercraft and supersonic passenger jets. “There is huge discussion nowadays about whether government should be involved in developing innovation. I don’t’ agree. However, the role of government is rather to create ecosystems around chosen technologies. ” says Ms Tylman. “These are the things that can only be delivered by government, tax exemptions, for example. And that’s why government should be treated as a partner for innovation companies.”

She mentions the 20 intelligent specialisations that have been identified by the Polish government as being eligible for grants for national operational programmes eg. OP Intelligent Development. “EU grants are only being distributed in these 20 areas.” Which is all well and good, but there also needs to be a development strategy in the area of innovation for our country. “There’s a long list of sectors, which is the basis for EU grants, but only a few of them that should be supported at national level. We should look for the sectors and subsectors where Polish know-how and innovation could really make a difference, and create our strategy around them.”

Defining innovation, a popular word all over the world, is tricky. Is it broad-ranging? Should it encompass innovative ways of working, marketing, and business process – or should the word innovation be used solely to describe genuinely new technologies?

“Everything,” replies Ms Tylman. “And I would add people. At which stage of development are we right now? What’s needed – incremental innovation, or a big leap forward? It depends on the sector. Polish enterprises are at the beginning of the way. Many have good products, machinery, but their approach to innovation is still ad hoc. They need to embrace the open innovation model – most Polish firms don’t know how to cooperate with start-ups. We’re still at the beginning of the road – where do we want to be in three-five years’ time? Creating good technology and leaving it in your room is worth nothing. Firms need to be able to commercialise it with success, and to inform the market about that success. Innovation is about culture, people, new ideas, and following up new trends. Everything must be connected. It’s not simply about new products.

Is one of Poland’s weaknesses an unwillingness – or indeed an inability – to cooperate? “Definitely yes. I spent last year a lot of time in the US, working with and around start-ups. The approach there is quite different. There, they cooperate in teams. They are better than Poles at the way they can distribute tasks within teams, manage milestones, and manage the innovation process. And another cultural difference – acceptance of risk in Poland is low. In the US, you take on a portfolio of three or more start-ups to manage, and if one of them is successful, you’re a great manager. In Poland, if one of them goes wrong – you’re a failure. Acceptance of risk is low in Poland. What is needed is innovation of the innovation process – structural change,” she says.

Are Polish universities up to the task? I ask whether Ms Tylman would agree with the thesis that Polish professors are not keen on work that has commercial applications, and focus rather on education and writing academic papers? “I’d agree,” she replies. “But it’s not the fault of scientists. We need to change the system used to evaluate our scientists. Points are given for publications and for basic research. Our professors are not interested in the application of projects that can be commercialised. They are still intent on creating educators and scientists, but not on scientists that can focus on commercialising technology. I hope that such change can be introduced by the new minister of science and higher education.

“The most interesting start-ups in the world are rooted in technology – physical, hard, tangible technological change, not just general idea for a “catchy” business. Of course even the best technology is worth nothing without a strong commercialisation plan and possibilities. The two are needed to exist together. So the system and law needs to be changed to make it easier to create special purpose vehicles (SPVs) – companies which would make it much easier for results of projects from scientists or universities to be commercialised. This  requires better public access to information, and better decisions, if project managers working for universities are to take risks with public money. How are the shares in – and profits from – such SPVs to be divided? Where will the intellectual property reside – with the university, or with individual scientists? How will these SPVs achieve connectivity with the market? Polish professors tend not to trust investors. The culture system around this needs to be changed. Also we don’t have much practice in this. So it’s hugely useful for us at PwC to cooperate with our networks in the UK, Luxemburg or Germany; our teams are good at asking questions and applying benchmarks set in other countries – looking at business structures, connectivity, as well as other entities in ecosystems – such as R&D institutions which are looking for investors,” says Ms Tylman.

I ask about the effects EU funding will have on Polish innovation during the current 2014-2020 financial perspective, in particular the Horizon 2020 programme. “Poland is the biggest beneficiary of EU funds in the current budget. The EU has learnt lessons from previous R&D programmes; under OP Intelligent Development, axis 1 devoted for entrepreneurs’ R&D projects, scientific institutions cannot become a part of any EU-funded consortium – they can only act as subcontractors. So scientific institutions have to sell their solutions and services to the private sector. The result of any project must be interesting to the market. I agree with this approach – this is the proper way round. It has to be steered by the private sector, with commercial outcomes as the main intention.”

One reason why Poland has been poor at commercialising innovation is lack of funding, other than grants. In the UK, there’s good access to business angels, venture capital, wealthy individual investors, crowdfunding In Poland we are still at the beginning. Does Ms Tylman consider access to finance an obstacle? “I believe that good quality start-ups will attract the investors, from all over the world. But there must be tax incentives for investors, the legal system must be more flexible. There’s some good practice that the UK can share; look at the Patent Box idea; firms in the UK have a 50% reduction in Corporate Income Tax on any profits made from innovations patented there.”

“Polish start-ups must learn how to attract funds. They need to work on relationships, connections, and find good partners. Polish scientists need to be prepared to present their ideas commercially. They don’t as yet feel the market, nor know how to pitch to investors. We can help them prepare forecasts and presentations for the potential investor, as well as negotiating agreements,” says Ms Tylman.

Does Poland risk a brain drain? “Yes,” she says, “most ambitious people are looking for best place to develop their ideas. We should attract the market to Poland and offer the start-ups what they need – not just money, but flexibility and know-how.”

Summing up, Ms Tylman stresses that rather than worrying unduly about which sectors or technologies to back, Poland needs to work quickly to create the right environment and legal systems for entrepreneurs and scientists to thrive. “The form of cooperation, e.g. clusters or virtual universities is less important that the fact that the proper ecosystem for start-ups is in place,” she says.

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